New Jersey-2016-A3994-Introduced

An Act establishing temporary relief programs for property owners impacted by Superstorm Sandy.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. a. For the purposes of P.L. , c. (pending before the Legislature as this bill):

"Commissioner" means the Commissioner of Community Affairs.

"Department" means the Department of Community Affairs.

"Forbearance" means a period during which obligations for mortgage and interest payments are suspended.

"Forbearance period" means either 36 months from the first day of the month next following application approval by the commissioner under subsection b. of this section, or the first day of the third month after a certificate of occupancy is issued for the property, whichever is sooner.

"Monthly housing costs" means the monthly costs associated with an applicant's Sandy-impacted property, consisting of mortgage principal and interest, property taxes, homeowner's insurance, private mortgage insurance, and condominium or homeowner association fees as applicable, in addition to monthly rent owed for any replacement housing in which the applicant is residing while awaiting a certificate of occupancy for the Sandy-impacted property.

"Monthly income" means monthly income, as determined by the department with respect to any forbearance application, or by the court with respect to any application for a stay of foreclosure proceedings.

"Mortgage" means a mortgage, trust deed, or other security in the nature of a residential mortgage.

"Sandy-impacted property" means any residential property damaged by Superstorm Sandy, and eligible for funding through the Reconstruction, Rehabilitation, Elevation and Mitigation (RREM) program or the Low-to-Moderate Income (LMI) Homeowner's Rebuilding Program, including, but not limited to, single-family and manufactured homes.

"Sandy-impacted homeowner" means a homeowner eligible, as determined by the commissioner, for the receipt of funds through the Reconstruction, Rehabilitation, Elevation and Mitigation (RREM) program or the Low-to-Moderate Income (LMI) Homeowner's Rebuilding Program.

"Superstorm Sandy" means the major storm that made landfall in New Jersey on October 29, 2012.

b. (1) The department shall supply forbearance application forms to Sandy-impacted homeowners prior to the first day of the second month next following enactment of P.L. , c. (pending before the Legislature as this bill). The commissioner shall grant a forbearance to any applicant who demonstrates the following:

(a) the applicant is a Sandy-impacted homeowner;

(b) the applicant's Sandy-impacted property was rendered uninhabitable due to damage from Superstorm Sandy;

(c) a certificate of occupancy has not yet been issued for the applicant's Sandy-impacted property since it was damaged by Superstorm Sandy; and

(d) the applicant's monthly housing costs exceed 33 percent of the applicant's monthly income.

(2) The commissioner shall approve or deny a forbearance application within 30 days of its delivery to the commissioner. If the application is not approved or denied within 30 days of its delivery, the application shall be deemed approved.

(3) Any forbearance granted pursuant to this subsection to a Sandy-impacted homeowner whose Sandy-impacted property is already the subject of a foreclosure proceeding may be issued in addition to the award of a stay of foreclosure proceedings pursuant to subsection d. of this section.

c. Notwithstanding the provisions of any law, rule or regulation to the contrary, the repayment period of any mortgage subject to the forbearance established in subsection b. of this section shall be extended by the number of months the forbearance is in effect. During the time of the forbearance and during the period constituting an extension of the mortgage, all terms and conditions of the original mortgage, except with regard to default and delinquency during forbearance, shall continue without modification, and there shall be no fees assessed for the forbearance, or penalty for early repayment.

d. (1) Upon application by a Sandy-impacted homeowner whose Sandy-impacted property is the subject of a foreclosure proceeding, the court shall grant a stay of foreclosure proceedings for either 36 months from the first day of the month next following application approval, or for the period lasting until the first day of the third month next following the issuance of a certificate of occupancy for the Sandy-impacted property, whichever is sooner, so long as the applicant is able to demonstrate the following:

(a) the applicant is a Sandy-impacted homeowner;

(b) the applicant's Sandy-impacted property was rendered uninhabitable due to damage from Superstorm Sandy;

(c) a certificate of occupancy has not yet been issued for the applicant's Sandy-impacted property since it was damaged by Superstorm Sandy;

(d) the applicant has received a foreclosure complaint for the applicant's Sandy-impacted property;

(e) the court has not yet issued final judgment on the foreclosure complaint;

(f) the applicant is able to demonstrate the ability to make the redemption payment in a reasonably timely manner following the award of the stay and forbearance, and remain current with subsequent mortgage payments; and

(g) the applicant's monthly housing costs exceed 33 percent of the applicant's monthly income.

(2) Any stay of foreclosure proceedings awarded by the court may be awarded in addition to the award of a forbearance pursuant to subsection b. of this section.

e. The commissioner shall notify each Sandy-impacted homeowner of eligibility for a forbearance, and a stay of foreclosure proceedings as applicable, prior to the first day of the second month next following enactment of P.L. , c. (pending before the Legislature as this bill).

f. Any homeowner awarded a stay of foreclosure proceedings or forbearance under this section shall be responsible for the maintenance of the property during the stay or forbearance period.

g. Any stay of foreclosure proceedings, and any forbearance, awarded under this section shall cease immediately if, after providing the homeowner an opportunity to be heard, a court determines that the subject Sandy-impacted property has been abandoned by the homeowner.

h. Nothing in this section shall be construed as limiting the ability of a mortgagee and the Sandy-impacted homeowner to participate in a mediation sponsored by the Administrative Office of the Courts in accordance with the requirements of the mediation program. Nothing in this section shall be construed to impact property tax and insurance obligations of a property owner related to any real property in the State.

2. This act shall take effect immediately.

STATEMENT

This bill gives the Commissioner of Community Affairs and the courts the ability to provide additional financial relief to certain homeowners affected by Superstorm Sandy. The bill defines a "Sandy-impacted homeowner" as a homeowner who is eligible for the receipt of funds through the Reconstruction, Rehabilitation, Elevation, and Mitigation (RREM) program or the Low- to Moderate-Income (LMI) Homeowner's Rebuilding Program, but who has not yet received those funds. The bill offers such homeowners eligibility for a forbearance of mortgage and interest obligations, to be applied for through the Department of Community Affairs. A forbearance would be granted only to homeowners who are able to demonstrate that their monthly housing costs, including costs associated with both their replacement housing and their damaged, unoccupied home, exceed 33 percent of their monthly income.

During the forbearance period, a homeowner would not have to make mortgage payments. The term of the mortgage would automatically extend, under the same terms, for the number of months the mortgage is in forbearance. This forbearance would be in place for a period of 36 months from the issuance of the certification of eligibility for the forbearance by the commissioner, or no later than the first day of the third month after a certificate of occupancy is issued for the property, whichever is sooner.

With respect to Sandy-impacted homeowners who are in foreclosure proceedings, in addition to applying to the commissioner for a forbearance, the bill also authorizes the homeowner to apply to the court for a stay of any pending foreclosure proceedings. The stay would be in place for 36 months, or the first day of the third month after the issuance of a certificate of occupancy for the property damaged by the storm, whichever is sooner. The bill directs the courts to only issue a stay in foreclosure proceedings if the homeowner is able to demonstrate the ability to make the redemption payment in a reasonably timely manner following the award of the stay and forbearance, and remain current with subsequent mortgage payments. As in the forbearance application, a stay would only be granted to homeowners who are able to demonstrate that their monthly housing costs, including costs associated with both their replacement housing and their damaged, unoccupied home, exceed 33 percent of their monthly income.